8 Multinational Corporations Pros and Cons

Jun 2, 2015

The infrastructure that multinational corporations are able to provide on a local level helps to achieve many goals. Not only can community programs be effectively operated, but good paying jobs are provided and that stimulates the local economy. The only problem is that with every benefit, there is always a disadvantage that comes with it. Here is a look at the pros and cons of what multinational corporations bring to the world today.

The Pros of Multinational Corporations

1. The size of the business helps to save consumers money.
Because multinational corporations are able to leverage their buying power for goods or services, it means that they have a unique chance at cost savings that smaller businesses just don’t have. This lowers the prices of products and that means consumers get to save money on what they need. Stores like Walmart are an excellent example of this.

2. They are naturally designed to create local wealth.
Multinational corporations also carry an advantage in that they are consistently dealing with foreign currencies. This means that depending on exchange rates, they can create more local wealth just because of the fact that they have a business presence in certain nations. This exchange of wealth can lead to the creation of more jobs and help to further develop local and regional economies.

3. A better set of standards can be achieved.
Multinational corporations are able to better control the supply chain from start to finish because they often control most, if not all of it. This means consumers can have confidence in the fact that no matter where they are purchasing something, there will be a certain standard of quality to the product. A burger at a Tokyo McDonald’s, for example, will be able to meet certain expectations just like a burger at a Seattle McDonald’s will.

4. Research and development becomes a potentially profitable venture.
Many multinational corporations have invested heavily and successfully into research and development. Their resources have helped to create many new products or items that have made life better or easier in some way. From plastics to better vacuum cleaners, the chance for a company to own copyrights and develop them has created profits, which has in turn created jobs and livable wages.

The Cons of Multinational Corporations

1. They limit competition.
Multinational corporations ultimately limit the choices that consumers have because they are able to dominate small businesses. Although there will always be a place for niche goods or services, the main spending that people do is typically through these large businesses because they are able to provide more value per purchase than small businesses can provide. That means many workers don’t even bother with their own creativity because it is so difficult to compete.

2. There is very little concern about local issues.
Multinational corporations are concerned with how national governments are creating laws or enforcing them. They want trade agreements and tax subsidies. If there is an issue at a local level, they don’t often care about social justice. One local economy can be ignored or even eliminated to create better profits elsewhere, which means consumers don’t have control over their choices.

3. Livable wages are always an issue that must be considered.
Multinational corporations don’t even need to bother with outsourcing. They can just start an office in an undeveloped nation, create some minor infrastructure, and then pay what most people in the developed world would consider to be an unlivable wage. A majority of workers today around the world in developing nations earn less than $2 per day. Some earn less than $1 per day. Economies of scale require better pricing and human labor is one of the most expensive commodities there happens to be.

4. Nothing gets in the way of profits.
From polluting rivers to adding high levels of carbon to the atmosphere, the first thought of these companies is always their bottom line. If environmental measures can be implemented that create better profits, then they’ll be done. If not, then the company will do what is necessary to maximize the value of all their earnings. The corporation comes first. Everything else comes second.

These multinational corporation pros and cons show that consumers can save money, but they might be paying a high price in other ways to do so. If a business can be ethically responsible and have a multinational presence, then a lot of good can be accomplished for the world today. If not, then a lot of harm may happen instead.

After being physically and mentally disabled by a brain tumor, Brandon overcame the odds to regain his health to help his pregnant wife in her fight against stage 3 breast cancer. A couple of years later he launched his blog. Today over 1 million business owners read his blog every month. Read Brandon's inspirational comeback story here.